By Thomas G. Wolfe, J.D.
Should the Consumer Financial Protection Bureau require bank mortgage loan originators to pass the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) mortgage competency and ethics exam? The Community Home Lenders Association, Inc. (CHLA) answers that question with a resounding “yes.”
Recently, in a letter to CFPB Director Richard Cordray, the CHLA renewed its “long-standing recommendation” that the CFPB should take action to require all bank mortgage loan originators to pass the SAFE Act exam. Underscoring the Dodd-Frank Act’s requirement that all mortgage loan originators must be “qualified,” the CHLA’s Sept. 20, 2016, letter urges the CFPB to begin implementing a universal SAFE Act exam “at least on loan originators that work for the large banks (over $10 billion in assets)—the banks that are subject to CFPB primary enforcement.”
Referencing the CFPB’s recent enforcement action and $100 million fine imposed against Wells Fargo Bank for creating unauthorized deposit and credit card accounts, the CHLA contends that safeguards are needed for bank mortgage loan originators. According to the CHLA, while non-bank lenders’ licensed mortgage loan originators must comply with the SAFE Act and its ethics requirements, 95 percent of bank and other depository institution registered mortgage loan originators “have never even taken the SAFE Act test—and there are more than a thousand registered bank/DI loan originators that actually failed the test but are still registered and permitted to originate mortgages.”
Heighten scrutiny. In addition to its suggestion that the CFPB could begin the SAFE Act initiative with large banks, the CHLA asserts that the CFPB should “heighten scrutiny” of bank mortgage loan originator training programs to ensure full compliance with the Dodd-Frank requirement that all mortgage loan originators be qualified.
Moreover, the CHLA letter maintains that if the CFPB were to require registered bank and depository institution mortgage originators to pass the SAFE Act exam and to participate in sound training programs, this would also serve to instill consumer confidence in the area.
For more information about bank mortgage loans, subscribe to the Banking and Finance Law Daily.
